As part of a MoU, both parties have agreed to pay a settlement amount of $60m to the government of Mali to resolve all outstanding issues
Leo Lithium to sell its remaining stake in the Goulamina project to Ganfeng. (Credit: Hans Benn from Pixabay)
Leo Lithium has agreed to divest its remaining stake of 40% in the Goulamina lithium project in southern Mali to its joint venture partner GFL International (Ganfeng) for $342.7m in cash.
The company has completed the previously announced sale of a 5% stake in the project Mali to Ganfeng, which is a Chinese lithium producer, for $65m. Signed in January 2024, this deal reduced Leo Lithium鈥檚 stake in Goulamina to 40%.
Both parties have also signed a memorandum of understanding (MoU) with the government of Mali. The MoU includes a settlement amount of $60m with the government to resolve all outstanding issues.
Leo Lithium indicated that amid mounting sovereign and security risks and the expected economic impact of the 2023 Malian Mining Code, its board believes it is best for shareholders to sell the remaining interest in Goulamina. The decision also considers the company鈥檚 financial position to fund remaining working capital requirements.
The company further stated that the Goulamina project will transition to the updated 2023 Malian Mining Code. This will potentially increase the Mali government鈥檚 project interest from 20% to 30%, with an additional 5% allocated for local stake.
Leo Lithium managing director Simon Hay said: 鈥淥ur relationship with Ganfeng remains strong, and we look forward to the next phase of our partnership. We have deeply appreciated our shareholders鈥� patience and support whilst we worked to settle this issue with the Mali Government.
鈥淕iven the circumstances, we believe this settlement and sale of the Project to Ganfeng represents the best outcome for all Goulamina stakeholders.鈥�
The new sale and purchase agreement (SPA) with Ganfeng, which is subject to regulatory approvals and other conditions, is expected to be completed by the end of October 2024.
Barrenjoey and Thomson Geer served as financial and legal advisers, respectively, to Ganfeng, in connection with the SPA.
The Goulamina lithium project spans across a 100km虏 area within the Bougouni Region, located approximately 150km from Mali鈥檚 capital city, Bamako. Production of its first spodumene concentrate is anticipated by mid-2024.
Leo Lithium will serve as a contractor under arm鈥檚-length terms while Ganfeng develops its own capacities. Leo Lithium鈥檚 duties will mainly include finishing construction, managing commissioning, and supervising operational activities鈥� ramp-up.